I am the former Co-CEO of KP Media, a leading Publisher in Ukraine. In addition to being the leading news organization in Ukraine (Korrespondent, Kyiv Post), we also owned the largest online business, Bigmir.net. I'm now back in the US, consulting and speaking in the areas of Digital Marketing and Digital innovation. You can find my website at www.DigitalTonto.com and follow me on Twitter @DigitalTonto.

The Rise of Artificial Intelligence Could Lead to Apple's Downfall

CUPERTINO, CA - OCTOBER 04: When Apple CEO Tim Cook introduced the iPhone 4s in 2011, he probably had no idea what he was unleashing. Getty Images via @daylife)

When Apple launched the iPhone 4S in the fall of 2011, it shattered sales records, selling over 4 million units in the first three days.

A big part of that success was Siri, the revolutionary new interface which responds to voice commands.

It appeared that Steve Jobs had done it again. (This time, from beyond the grave no less!). Back in the ‘80’s, he had transformed personal computing by introducing the public to the graphical user interface (first developed at Xerox PARC). Then came the first iPhone with its multi-touch interface, revolutionary for its time (but developed by FingerWorks, acquired by Apple in 2005).

Now, Apple appeared to be taking it to the next level, with an interface that didn’t require hands at all. Once again Siri was not only a technological triumph, but a smart business move. Rather than spend years lavishing billions of dollars on an R&D program, Apple picked up Siri for a reported $200 million. Even better, the initial research was financed by DARPA. (Thanks Uncle Sam!)

Alas, things were not what they seemed. In fact, Siri could signal the beginning of the end for Apple.

First, the obvious. When you ask Siri for something, it inevitably sends you to Google. So while Apple impresses consumers, their arch-rival at Mountain View profits. Apple has since launched their own maps (not very effectively, I might add), but their only other option for basic search is Microsoft, which wouldn’t be much of an improvement in terms of competitive concerns.

Second, even Siri itself is not truly an Apple product. Much of the critical technology is provided by Nuance Communications, a leader in speech recognition. So it’s hard to see how Siri gives Apple any competitive advantage at all.

Probably most importantly, with Apple’s paltry R&D budget, it is unlikely that they will be able to compete beyond interfaces and devices (and with the launch of Samsung’s Galaxy 4S, even their position there seems to be eroding). As I wrote in an earlier post for Forbes, a variety of companies, ranging from Facebook to IBM are investing heavily in systems that combine natural language with Big Data.

Apple, for its part, doesn’t seem to have any significant artificial intelligence platform beyond the Siri interface and no big data effort to speak of. If they did, we would know about it. Despite Apple’s well deserved reputation for secrecy, even they wouldn’t be able to hide hiring the top notch talent that they would need to build a strong artificial intelligence platform. There’s just not that much of it around.

So it appears that Apple is at a crossroads. They have plenty of cash and leadership positions in both smartphones and tablets, two high growth categories that are far from saturation. Moreover, their notebook and iPod businesses continue to be wildly profitable. However, it’s tough to see how Apple will compete 3-5 years from now when Big Data and artificial intelligence become an important part of the consumer experience.

As I’ve pointed out before, it’s not clear that Tim Cook understands the problem. He seems to believe that Apple can continue to operate as it always did, making “insanely great” products by improving existing technology. However, every company needs to pivot at some point and it seems like time is running out for Apple.

Oh, and one more thing. Nuance Communications, the company that provides the technology that Siri runs on, was originally called Kurzweil Computer Products Inc. Its founder, Ray Kurzweil, recently joined Google as its Director of Engineering.

- Greg

(Disclosure: I have an indirect financial interest in both Apple and Google through a fund)

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Greg, your so-called analysis is so wrong-headed I don’t know where to start. If you don’t see Apple as the leader in tech innovation of all types, then you need to stop writing about tech. You say you write about the intersection of media, marketing and technology. I think you lost your way.

“He seems to believe that Apple can continue to operate as it always did, making “insanely great” products by improving existing technology. However, every company needs to pivot at some point and it seems like time is running out for Apple.”

That seems to be the worst way to describe Apple. Every competitor of theirs, Google included, are pretty much copy cats of their idea and technologies. Unless you expect them to change the world every other days.

I think Siri will help AAPL with a new search engine that would be given free or at a lesser price to advertisers to kill googles dominance on Google Search. APPL will go big on Services and newer products in the next few months. iradio, iwatch, isearch & ITV are some of the products. I think you will like the logic of the following article which talks about analysts and media types. Do read this article http://appleinsider.com/articles/13/03/23/googles-android-powered-by-remarkable-new-flawgic

Hey Forbes, If you’re interested in me subscribing to your magazine, how about writing articles that are true to fact and not BS speculation. Apple’s SIRI, while still in beta form as far as I’m concerned, does not invariably take all requests to Google’s search. The whole point of SIRI is to give the user explicit access to data bases of info like Yelp and others to find the answer quickly without having to rummage thru google’s search results. Come on Forbes you can do better. The “Apple is Doomed” hit pieces are getting old and are a waste of my time.

Apple’s never needed to innovate; their entire history has been taking existing technologies and paring it down for the common user.

Apple users think Apple are innovative because they take obscure, and often esoteric tech, and apply parsimony until it is simplified enough for everyone to use — at which point it seems new even when it’s been around for the last half decade. They don’t require a large R&D staff because they are essentially localizing content to the masses from the abstruse computer engineer/scientist sects.

Every time I read a article like this what comes to mind is in 4 or 5 years from now apple could have 500 billion in cash from what they are doing today. It really won’t matter what apple R&D does for future products. They will be able to buy up just about any company they want to get the products they want to sell. Not to many analyst even look at this prospect. I think to be a investor in apple you have to read into the long term future. There could come a time when people look back at the stock price today with disbelief that it was so darn cheap and few were buying.